Virus adds to woes of Garuda facing debt bill

Bloomberg

The coronavirus outbreak couldn’t have come at a worse time for PT Garuda Indonesia, pummeling demand at the flag carrier just as it faces a debt bill for half a billion dollars.
Debt market concern about sagging travel demand and the impact of financial market turmoil has caused Garuda’s $500 million notes due on June 3 to tumble to a record low of 55.3 cents on the dollar, according to Bloomberg-compiled prices.
The virus epidemic is wreaking havoc on airlines across the globe, and the Indonesian state-owned carrier is no exception. Garuda slashed its international capacity 30% as of February 17 compared with what it offered four weeks earlier, resulting in a 12% decline in its total seats being offered, according to data from OAG Aviation Worldwide.
“Under a normal situation, the company’s debt issue should not have been a major problem,” said Fahressi Fahamlesta, a Jakarta-based analyst at PT Ciptadana Sekuritas Asia. “But this outbreak of coronavirus has become a perfect storm for the company resulting in slumping travel demand and a crashing market which will make fundraising difficult.”
Garuda spokesman Dicky Irchamsyah couldn’t immediately comment about the company’s debt situation.
The airline has a history of defaults. It missed payments during the Asian financial crisis in the late-1990’s, when the rupiah plunged. It also restructured its international and local currency debt around 2010. Its total debt was $1.5 billion, compared with cash and equivalents of $345.8 million as of September 30, according to Bloomberg-compiled data.